What makes up the price of U.S. gasoline?

I talked earlier this week about how crude oil prices have increased about 15 percent over the past year, which reflects a trend in rising commodity prices across the board in 2010. Not surprisingly, this means that gasoline prices are also up, because crude oil is the single-largest factor in determining the price at the pump in the U.S.

As I mentioned on Monday, the price for crude oil is set in worldwide markets where many buyers and sellers react to market fundamentals, including assessments of current and future supply and demand factors.

But just how much does the price of crude impact U.S. gasoline prices? In November 2010, when the average retail gasoline price was $2.86 a gallon, crude oil accounted for 71 percent of that price.

So what makes up the other 29 percent of gasoline prices? According to the Department of Energy, combined federal and state taxes on gasoline accounted for 14 percent of the average price. The remaining 15 percent of the price on average covers the costs of refining, transportation and marketing. The DOE chart at left shows this average price breakdown.

There are very few consumer products whose price is driven so overwhelmingly by the price of the commodity behind it, as is the case for gasoline and crude oil.Consumers see this correlation everyday on gas station signs that display the fluctuating price of gasoline. In fact, as you can see in the chart below, gasoline prices have closely tracked crude oil prices over the past 10 years.

Let me know if you have questions about how the market-driven price of crude oil affects gasoline prices.


62 Comments

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  1. Frank Banister says:

    Seems supply and demand no longer controls price for commodities. not even OPEC can set a price for crude, you can thank speculators in the stock market for over inflated crude prices. As seen in the chart (easier to see if it was more detailed) gas prices spike at an exaggerated rate compared to oil. Also gas will spike quick on a rise in crude price, yet drops very slow on a fall in crude prices.

    • john thaller says:

      No, what you don’t realize is there is a difference between speculators and the ones that work the futures market. There are two sides to this, those that are betting that the price will go up, and therefore buy, and those that are selling. If those that have the commodity have only a tight supply, they will sit and wait for their price. When there is an oversupply, then those who are bidding the price up so to speak, are actually scrambling for selling positions they cannot hold because they cannot take delivery, actually sell their positions at lower prices and sometimes even at a loss to get rid of the commitment. You may call it speculation, and in the true definition of the word it is, but it speculation both ways, up or down and on a longer term basis, supply and demand does matter.

      • James Friedman says:

        1) the futures price helps inflate the price. Want to reduce the impact? simply increase the margin required to trade the product. Fewer players may change the price
        2) since crude is priced in dollars, a weak dollar inflates the price. prop-up the value of the dollar – reduce the cost of crude.

    • Burton Trattner says:

      There is nothing that can fix this economy better than cheap gas! That increases discretionary spending and will revive the economy. The reason it is costly in the USA is because Democrats and environmentalist base want it that way in order to preserve the green iniatives. Environmentalist political clout removed the ability and incentives to expand our domestic oil supply. We have enough oil in the US to be self sustained for another 100 yeas. We can’t get our own oil becuse of Democtrat politics.
      In 2008 Bush’s energy proposed policy called for more domestic drilling via less restrictions. but he was a Lame Duck and the Democrat controlled congress laughed him and the oil companies out of town. Now we pay!

      • David Powell says:

        I would love to see your source that says we can produce enough oil domestically to meet all of our demand for even 1 year let alone 100.

        https://www.cia.gov/library/publications/the-world-factbook/geos/us.html

        If you take a look at the CIA factbook entry on the US, which I linked to above, you can see we produced an estimated 9.056 million bbl/day of oil in 2009. Only 1 million bbl/day short of the largest producer Russia and 700K bbl/day less than Saudi Arabia. We produce quite a bit of oil already.

        Unfortunately we if you look further you’d notice we consumed an estimated 18.69 million bbl/day in 2009. Given 2009 was during the recession I think it is save to assume that number has only gone up since.

        Put that all together and to completely satisfy our demand with domestic production we’ll need to double our production of oil immediately and then continue to keep pace with any increase in future demand all while keeping gas as cheap as it is now for 100 years. Please explain to me how that isn’t the biggest fairytale I’ve ever heard.

  2. mike raarup says:

    It really peeves me that prices at the pumps go up so much. It is said that 10% goes towards distributing. Well how about the trucks that haul the fuel as well as trains and ships. The cost of fuel rising just makes the rest of the products that shipped go up too. It seems. It’s seems to be a catch 22 .

  3. Yj Draiman says:

    Oil Reserves in the USA – Abundance of Energy

    OIL Reserves in the Trillions of barrels – you better be sitting down when you read this!

    How does this grab you? And what do you make of it?

    About 6 months ago, the writer was watching a news program on oil and one of the Forbes Bros. was the guest. The host said to Forbes, “I am going to ask you a direct question and I would like a direct answer; how much oil does the U.S. have in the ground?” Forbes did not miss a beat, he said, “more than all the Middle East put together.” Please read below.

    The U. S. Geological Service issued a report in April 2008 that only scientists and oil men knew was coming, but man was it big. It was a revised report (hadn’t been updated since 1995) on how much oil was in this area of the western 2/3 of North Dakota, western South Dakota, and extreme eastern Montana ….. check THIS out:

    The Bakken is the largest domestic oil discovery since Alaska ‘s Prudhoe Bay , and has the potential to eliminate all American dependence on foreign oil. The Energy Information Administration (EIA) estimates it at 503 billion barrels. Even if just 10% of the oil is recoverable… at $107 a barrel, we’re looking at a resource base worth more than $5…3 trillion.

    “When I first briefed legislators on this, you could practically see their jaws hit the floor. They had no idea.” says Terry Johnson, the Montana Legislature’s financial analyst.

    “This sizable find is now the highest-producing onshore oil field found in the past 56 years,” reports The Pittsburgh Post Gazette. It’s a formation known as the Williston Basin , but is more commonly… read more »

    …referred to as the ‘Bakken.’ It stretches from Northern Montana, through North Dakota and into Canada . For years, U. S. oil exploration has been considered a dead end. Even the ‘Big Oil’ companies gave up searching for major oil wells decades ago. However, a recent technological breakthrough has opened up the Bakken’s massive reserves….. and we now have access of up to 500 billion barrels. And because this is light, sweet oil, those billions of barrels will cost Americans just $16 PER BARREL!

    That’s enough crude to fully fuel the American economy for 2041 years straight. And if THAT didn’t throw you on the floor, then this next one should – because it’s from 2006!

    U.S. Oil Discovery- Largest Reserve in the World

    Stansberry Report Online – 4/20/2006

    Hidden 1,000 feet beneath the surface of the Rocky Mountains lies the largest untapped oil reserve in the world. It is more than 2 TRILLION barrels. On August 8, 2005 President Bush mandated its extraction. In three and a half years of high oil prices none has been extracted. With this mother load of oil why are we still fighting over off-shore drilling?

    They reported this stunning news: We have more oil inside our borders, than all the other proven reserves on earth.. Here are the official estimates: – 8-times as much oil as Saudi Arabia

    - 18-times as much oil as Iraq – 21-times as much oil as Kuwait

    – 22-times as much oil as Iran

    - 500-times as much oil as Yemen

    - and it’s all right here in the Western United States .

    HOW can this BE? HOW can we NOT BE extracting this? Because the environmentalists and others have blocked all efforts to help America become independent of foreign oil! Again, we are letting a small group of people dictate our lives and our economy…..WHY?
    James Bartis, lead researcher with the study says we’ve got more oil in this very compact area than the entire Middle East -more than 2 TRILLION barrels untapped. That’s more than all the proven oil reserves of crude oil in the world today, reports The Denver Post.

    Don’t think ‘OPEC’ will drop its price – even with this find? Think again! It’s all about the competitive marketplace, – it has to. Think OPEC just might be funding the environmentalists?

    YJ Draiman

    • Ted Culbreath says:

      No, OPEC isn’t funding the environmentalists. But I’d bet a buck or $3.10 at the pump that big oil is. It’s in their best interests to keep prices up or pray they stay up. Instead of leading the way in environmentally safer ways to extract oil and pushing Congress to open up oil lease and drilling rights. They are racing to the bank. They love having the oil price tied to a region as unstable as the middle east. Anyway they sling it, It still smells like B.S.

      • Joel Greer says:

        Using the catch-all term Big Oil is the word-phrase substitute for wanting to blame someone for higher prices, but without a single ounce of understanding as to what all affects prices at the pump, it just shows ignorance. Like the number of times people use the amorphous term “they” in their conversation is INVERSELY proportionate to their intelligence. “They” do this, because “they” do that, and then all the “theys” conspire to hijack the fuel bills of small minded, vocabulary-lacking, persecution complex, complainers.
        The largest US oil company is only 17th on the list of the world largest oil companies.
        IF, the US did not import oil, THEN the US companies could control prices. AND, quiet likely WOULD love to control prices in the US. BUT, the US oil companies do not control prices
        Since we choose to remain an oil importing Country, our gas prices are held hostage by the oil bought and sold on the International commodities market.
        WHY doesn’t anyone complain about the % taxes of every gallon of gas which goes to the federal Gvt and State Gvts?
        The Gvts acts concerned, but the Gvt never offers to lower their tax %. When the % taxes were started, it was considered fair….as the more gas sold, the more our roads would be used….and the “taxes” were supposed to be used only for the repair of and building of more highways….EXCEPT, the higher gas gets…the LESS people drive. The gas taxes, like all taxes, create an addiction to that income and is spent on other things rather than new roads and repairs as it was initially intended.
        When America grows up and utilizes OUR reserves….we will no longer be held hostage to OPEC-set production outputs for their member Countries.
        How about we hold the State and Federal Gvt. to task to dedicate a… read more »

        …set part of the % the Gvts receive from each gallon toward alternative energy options.
        In less than a decade, if we produce ALL of our needed oil, gas would be below and stay below $2 per gallon….and would also fund our progression into non-fossil fuels.
        When oil has to travel 8000 miles to get to US refineries, it adds a huge expense. Check what the costs. including insurance, are to bring oil from the Middle East…it’s outrageous and we are stupid to continue import what we can produce ourselves. Think what that would do for American sold products when our energy costs stayed under $2. Many Countries like Japan CAN’T produce their own oil. The US can do so.

    • mike s says:

      Unfortunately this oil is not a reservoir underground like we normally think. This oil is locked in oil shale and it costs a LOT more to get it out. You must use a process called “frakking”(sp?) to get at it. Otherwise youd have to dig up half the country instead of drilling a hole like in the Gulf. And even if we did start getting it, the Chinese are the main culprits behind high prices because they’re buying up as mch as they can get; driving up the price. They USED to EXPORT oil several years ago, now theyre one of the biggest importers.

    • Kate Walters says:

      You’re recycling an email from 2008, Yj. There are several things wrong with your post. The Bakken formation is primarily shale oil, which can’t be as easily extracted as a common oil field. There are about 3.0 to 4.3 billion barrels of extractable oil in the Bakken area. The US imports approximately 3.65 bilion barrels a year, so the entire output of the Bakken shale fields would only last slightly over a year. The technology to produce one million barrels per day, which is about 10% of the oil we import daily, from shale formations is still 20 years in the future, according to James Bartis of the Rand Corporation.

      In the future, you might want to actually research the information found in emails that are being sent willy nilly to everyone.

    • mike johnson says:

      Ahhh, come on now. Who is trying to fool who here. Even if we allow every pocket in the US to be drilled and oil is found, there are only so many oil companies. The run the country (Bush/Cheney) and they set the price at the pump. The local station doesn’t set the price at all. They are told what to post. That is why they make peanuts on gas or diesel.

      Diesel is what drives our economy. Raise the price and you get record profits almost every quarter.. Raise the price and the richer get richer and the poorer poorer. Shippers all have to pass on the cost of prices to the consumer. They are barely affected as commerce HAS to flow. Airlines simply pass on the cost of fuel to the passenger, one way or another. So, Joe Citizens gets to pay more and have less to spend on household goods, made out of petroleum I might add.

      So, until our government takes control of their own oil resources, from drilling, to processing, to their own gas station, we will be at the beck and call of Big Oil.

    • Stan Nedorlander says:

      Yes they didn’t know of this because this is a BOGUS Internet report…

      http://www.snopes.com/politics/gasoline/bakken.asp

    • Andrew Larson says:

      Your math is WAY off. The US consumes ~19M barrels per day. So 500B barrels produced / 19M consumed / 365 days = 72 yrs. So We would only have 72 years of oil from that reserve if we were able to collect it all and if we only used it here in the US, which we would almost certainly sell to other countries because we would make a crap ton of money that way.

      Do you math right before jumping the gun on all of your info.

    • Jack Heath says:

      YJ Draiman – You share a very limited perspective like most Americans shouting “Drill baby Drill!!” because you think the only use of oil is burning it off in your car tank. Cars can run on something else if they had to, if gas got too expensive you could still run cars on electric (coal), cooking oil (animal fat), vegetable oil (corn), etc. However, crude oil can not be replaced in terms of producing plastics, cosmetics, electronics, silicone chips. Our military superiority comes from our technological superiority. If oil is a limited resource, shouldn’t we consume the oil of other countries first? …and if it is something that is truly indispensable; does it matter how much we have? If it’s gone, it’s gone.

      Forget environmental concerns. The day WILL come when you won’t be able to get any more oil from the middle east, Africa, or the Virgin Islands…then your children will be glad some environmentalist left massive domestic reserves.

  4. Scott Smith says:

    Ken, you left out some important numbers.

    What was the cost that you paid per barrel of crude? And if you are hitching your prices to the price of crude oil then why does the price at the pump not decrease by the same percentage when the price per barrel decreases?

    What exactly is distribution and marketing? If your gross revenue for 2010 is $383 billion, are you really spending $38 billion on distribution and marketing??

    Where is the profit? I don’t see profit built into your breakdown. Is that part of the 10% for distribution and marketing? What percentage of that $2.86 per gallon is your profit?

    • john thaller says:

      I would separate distribution and marketing. Marketing tends to not vary with price. Distribution might as an oil company will extend it’s reach in distribution if the market is tight. For instance, if there is a strong demand for gas in the North East, beyond the capacity of the refineries there, than a refinery in Texas might ship it’s oil up north, with higher distribution costs.

      Exxon’s profit is 8.5% right now which is about where I think it should be. A company cannot exist if it does not make a profit. Had the profit been 30% I would also complain. BP has a loss reported for the last quarter as you expect. For comparison Duke Energy, major electricity supplier has a profit margin of 9%.

      For comparison, Apple Computer has a 21% profit margin, and it is now the largest company in the world based on capital value. So if you are going to complain about profit margins, you would be better off targeting Apple.

  5. Harvey Grove says:

    How come, what is possibly the LARGEST company in the WORLD, pays so little tax as a percentage of income? Where the heck does it all go? How much is spent for lobbying? How much is spent for “payola” of all kinds to get “special” treatment from the IRS and foreign governments? What is the actual return to stock holders that induces them to invest in the company? How much doe the company spend, as a percentage of income, for reinvestment in the company?

    Stock holders purchase stock to enjoy future returns, therefore, estimated profits and payouts are what causes stock holders to buy the stock. What is the percentage of income paid out to stock holders?

    • Tom Mullen says:

      Harvey,

      You need to get a clue !!!

      XOM paid
      43% of it’s gross income in taxes in 2009
      44% in 2008
      42% in 2007

      BTW – these rates are wy abaove the average US corporate tax rate

      • John Lucas says:

        Tom,
        Dig a little deeper…
        Yes, they paid in a lot of taxes throughout those years, but you missed out on their TAX REFUNDs. They get back more than 55% of what they paid. This cut their income tax to 18% for 2010, almost zero for 2009, and 22% for 2008.

  6. Phil Barberg says:

    If the wellhead price goes up say a dollar today how can our local pump price go up a dollar within a day when it takes a whole month for that imported oil to get to our pumps? That’s a whole month of shear profit for the oil companies which are selling the older cheaper gasoline…

    In the 70s I was an oil company dispatcher and had first hand knowledge of the oil company rip offs. I would get an independent dealers order and write it up on Union 76 invoice, then ship it out of a Texaco refinery in an unmarked tanker truck. Often this would be a Chevron dealer who can order outside of Standard Oil if they cannot fill his order. We would claim that the supplies are low, while trying to find more abandoned service stations to hide our gasoline supplies in. We were charging middle east prices for south American and Alaskan oil.
    It was all about keeping the supply limited to support the highest prices possible.

    Tell me that today the industry has reformed and is not manipulating supply to make the biggest profit.

    We should be getting a report of a refinery catching fire soon to justify using to new higher import price and claim the loss of the refinery has caused a limited market supply.

    I think that the President should declare an economic emergency and freeze the price of gasoline for 30 days. At this time our country cannot afford any oil company games. They (the oil companies) can easily maintain pump supplies and the price loss would hardly be noticeable on their bottom line…

  7. Hal Troupin says:

    Your expense chart shows 100% of the gas breakdown is for expenses. That cannot be. What is the net profit after expenses? It doesn not show on your pump diagram!

  8. David Marcantuno says:

    It’s a good thing variable rate credit cards and adjustable rate mortgages do work the same way gas prices do. Every time the Fed raises the prime rate by a quarter of a percent, credit cards and mortgages would go up 5% within a day; then when the Fed decided to lower the prime rate a quarter of a percent, it would take 1-2 weeks for your loan to go back down maybe an eighth of a point.
    I love capitalism, but I hate the way fuel prices work…

  9. Mike H says:

    Question- as I look at this graph, I understand the relationship between crude oil and finished product. What I am not understanding is the obvious spikes in gas prices where crude price does not increase- for example in late 2005, much of 2006, mid 2007.

    As a buying public we feel jerked around by companies taking advantage of every time the middle east appears in the news. The gas at my local station increased by 40 cents in a day- and I know that they did not have a delivery in the interim- the fuel in under the station was purchased long prior to the latest news.

    What gives?

  10. Citizen Kane says:

    Fuzzy math strikes again…

    $88 / 55 gallons = $1.60 per gallon
    $2.86 x .71 (supposed cost of crude according to this article) = $2.03

    So if it costs us $1.60 and we are paying $2.03 at the pump per gallon for the crude, where is the other $0.37 going? Oh yeah-oil company profits! So in reality, of the $2.86 per gallon, Big Oil takes $1.97 off the top and the other $0.99 gets divided up among everyone else. Add in that 10% for marketing and 5% for refining they actually get another 29 + 14 = 39 cents per gallon added to the cost and their share of the $2.86 rises to a whopping total of $2.40 to the oil compaqny and $0.46 to taxes!

    • lee mcmindes says:

      there are 42 gallons to a barrel of oil.

    • Andrew Larson says:

      that 14% taxes goes to state and federal highway and roads. How do you think the DOT gets most of there money to maintain the roads and expand highways. The reason the North has so many toll roads is because if they didn’t then gas would be another 20cents higher on top of their already higher price.

  11. P J says:

    The price would be higher if it wasn’t for government-subsidized corn-based ethanol, which is damaging to engines. Manufacturers say it doesn’t damage the engine, but it does.

    In Oklahoma, we have gas stations that sell no-ethanol gas. What would happen to the price of gasoline if either the government no longer continued to subsidize corn-based ethanol or refineries stopped including ethanol?

    • John Lucas says:

      I’ve ran my lawnmower, car, and pickup on 10% ethanol gasoline and 24% ethanol gasoline, when it was cheaper, for the last 9 years that I’ve owned them; I still own them, run 10% ethanol gas in them, and use them regularly.
      Almost all the cars in Brazil run on ethanol and I don’t hear of big problems from Brazil.
      Ethanol is an oxygenator, so helps the fuel burn better. It also increases octane levels helping the engine run better. Finally, it burns cooler reducing overheating and helps the engine run longer. The only problem people with older engines had was the rubber gaskets. They weren’t produced to withstand ethanol; most engine makers now put in better gaskets to deal with ethanol.

      • Doug Johnson says:

        Those of us that lived in states where fuel is oxygenated part of the year are all too familiar with the down sides of it too… Fuel economy that is 10-20% lower than non-oxygenated, and considerably lower output power from engines. Many states have abandoned the programs because in the long run it just doesn’t pay off in any significant way.

  12. Trebor Snave says:

    Who is to blame for rising gas prices and the public indignation about cost? Very simple. You are, Mr. and Mrs. America. Yes, Mr. and Mrs. America, you are the ones responsible, but you are too afraid or greedy to admit it. It is a lot easier to remain ignorant of what is involved in the price of a gallon of gasoline out of the pump, and to simply blame someone else than to admit your own responsibility.

    Yes, you whine and complain about oil industry profits, but you are too lazy to inform yourself about the economics of business, let alone of the oil industry. Every business is in business to make a profit, whether it is the guy at the swap meet or Exxon oil, and that is called profit margin. Now, Exxon had a profit margin of 9.8%, and you consider that obscene. But what about the 29.3% profit margin for Microsoft, the 22% for the makers of Marlboro, the 20.9% for McDonald’s, the 15.7% for Citigroup, the 13.3% for Hummer, or the paltry 12.8% for General Electric? Why even the Finns who produce your Nokia cell phones make 20%!

    • Daniel Shipman says:

      Mr. Snave:

      Let me give you a little lesson on “economics”. The profits of oil companies cannot be compared to McDonalds or Hummer. When oil prices rise it influences ALL sectors of the economy that transport goods! That means every price, on every food item or on an article of clothing, and yes my own gasoline goes up. That means every dollar put in my gas tank is also NOT spent in any other sector of the economy. And when consumers see record profits in times of depression/recession when other businesses continue to falter especially small businesses, it is tough to take.

      Now I would like to see exploration in this country increase, supply to increase, and if the oil companies can do this and produce it more economically at any profit margin they want I am for it.

      The reality is “if” you do your research you will the U.S. economy and the oil industry have typically had an inverse relationship. Which means when they are doing well we usually are not!

      Pardon me if I favor one sector struggling and the other 99 percent enjoying success.

  13. Jeff Land says:

    Ok – Im pretty simple, and I see that approx 30% is for refinement, delivery, etc. Approx 70% is based on price of crude.

    So if gas is now $ 3.00 around $ 2.10 would be the price of crude per gallon or 42 gallons = barrel of oil ($ 88 – 90).

    Why is it when the price is $ 3.00 as above, I can drive across the border to Mexico and its much less than $ 2.10 or when I was in other foreign countries is MUCH less than $ 2.10?

  14. William Reeves says:

    Explain to me why is it that Diesel which is one if not the least refined products made is so darn expensive !? Most of our Infrastructure runs on the stuff everything from Trains to power plants to commercial vehicales as well as most all shipping/ Ocean going vessels and yey it is nearly $4.00 a gallon here in Texas !?

    • Andrew Larson says:

      Its a complicated mess. Diesel is refined less do to petrol demand which raises its price. There are more/higher taxes on diesel compared to petrol. Also when winter comes the price goes down a bit due to home heating, but can easily rise much higher if the winter is particularly colder/longer. etc..etc..

    • Ash Chambers says:

      It is VERY frustrating–my car gets 55 miles/gal on freeway thanks to fuel injection technology, but this has been somewhat negated due to large increases. More than the taxes and seasonal fluctuations, what really drives the price up is demand. More people around the world are driving diesel cars. On top of this, despite most Americans decreasing their driving due to rising fuel costs, truckers have not because deliveries must still be made and consumers pay the increased price. While gas demand has decreased, diesel demand has not. What confuses me however is that supply should adjust for the demand in diesel–after all, it is cheap to make. But perhaps it has but the producers are enjoying the extra income and work to maintain the illusion that it’s still in short supply. After all, they’ve had years to adjust for this.

  15. Jay Buchanan says:

    I’m impressed the Exxon Mobile has a site like this and is making an effort to educate and communicate with consumers. As of lately, I am protesting $4.00 a gallon gasoline in the United States by boycotting Exxon Mobil gas stations, a futile attempt I agree. The reason is due to the billions of profits Exxon Mobil makes along with the recent 8% CEO salary and bonus increase. What ever happen to improving operational costs to benefit the end customer?

  16. joe paris says:

    pardon me a non ExxonMobile perspective. I offer you this comment and ask for your sincere response: I notice that forward-planning governments – european, japan, even arab/middle-eastern – put a much higher tax on gas, in order to fund sustainable energy development and higher cost of future domestic production (e.g. shale oil), and to eliminate economic stress/shock from erractic market price fluctuations. this works well for other countries as diverse as Spain and United Arab emerates, both of which experience very little economic turmoill from fluctuating oil markets, and are in far better position to maintain their national economies in the long run because their dependence on oil is reduced. For Spain (like USA, in theory) this is a costly investment in long-term national security; for URE or Saudi Arabia, it is easier, but just good busines planning. What optimism can be foreseen for us in ExxonMobileUSA?

  17. Stephen Burgess says:

    What would be more informative and a little less misleading would be a explanation and a diagram of along with a discussion “What Makes Up The Price of a Barrel of Crude Oil”. As I have researched and been able to determine, the cost of a bbl to the oil companies is about 18 – 20 dollars. Please explain the rest?

  18. Christian Friedrich says:

    Funny I don’t see profit anywhere in the price of gas? didn’t exxonmoble make 149 billion in profits last year?

    you don’t mention also that you sell the crude oil to yourselves.
    isn’t exxon mobile also the global leader in crude oil production?

    Remember the tax on gas is a more fair method of paying for roads then toll booths are.

    bridges tunnels highways are not cheap. the tax rate should probably be double or triple what it is.

    Not to mention the wars we fight so that exxon is able to get cheap crude oil.

  19. Colin Ernst says:

    After looking at your breakdown of gas prices I wonder where profits fit into this chart? Oil companies obviously need to make a profit like any business but it seems like all of the money is going to costs in this chart. What percentage goes towards profits?

  20. lawrence richards says:

    It’s a guessing game as to how much damage drilling and removing oil is causing to the structure of the planet. Pumping oil from beneath the Earth’s surface could bring on more problems then polluting the atmosphere. Drilling oil wells and taking oil out could be the cause of the planet warming. And, pumping oil could cause more devastating Earthquakes. It’s almost inevitable that removing billions upon billions of barrels of oil will have some effect on the planet. To preventing even greater catastrophic conditions… all drilling should be stopped and leave oil where it lays.

    Much like removing billions of trees causing problems with the natural climatic processes…trees protect the surface environment. Oil beneath the surface is protecting the earth surface from warming. Oil has an insulation effect…absorbs more heat then water or other natural materials, plus producing gas pressures. It only stands to reason, oil beneath the surface reduces heat from the molten lava from effecting the surface.

    Surface warming is causing a separation between Polar ice caps from the land masses. Once this happens, sever earthquakes break off massive sections at a time, depositing the melting ice into the ocean. High tides will bring even more devastation. Drilling for oil should be stopped. At least there should be some research as to how much damage drilling of oil is causing to the planet Earth.

    • Ash Chambers says:

      Lawrence, your thought process for oil’s insulating effect is, well, wrong. The reason oil use has warmed the planet is because of the by product of CO2 and how it resonates when the energy from the Earth hits it on its way back into space. Earth is hit with energy from the sun and ‘reflects’ energy back into space. Energy that would normally pass through (caught by some air molecules, maintaining acceptable heat) is essentially caught by the CO2 molecules, which resonate differently when hit and their vibrating traps this heat. That’s what traps the heat–not the oil itself, but it’s byproduct when burned. There are so many layers to the Earth that we don’t need to worry about oil protecting us from molten lava. I’m not saying that you don’t need to be concerned about the effects of climate change due to gas emissions. It’s going to change A LOT within the next 50 years, making many common natural processes a thing of the past. Drilling is really not that big of an issue. There are a lot of natural phenomena that do much more damage–maybe look up the tree beetle that is ravaging the forests in the west right now. But if you are really concerned, do your research so you know what you’re concerned about. Otherwise, opponents against diminishing our dependence on fossil fuels wont take you seriously.

  21. Daniel Lovejoy says:

    I’m more concerned with the change in pricing since the Cheney “Energy Task Force Commission”.
    I am concerned that gasoline prices jump immediately after the price of crude rises, yet doesn’t immediately drop when the price of crude drops.
    I am concerned about all of the government subsidies that don’t get passed along to the consumer.
    I am concerned about record high profits during a time that oil companies are getting record tax breaks.
    I am concerned that big oil is determined to strip environmental protections for a profit to only themselves.
    I am greatly concerned that supply was up, demand was down and the prices continued to rise at the pump.
    I am incensed that oil companies are allowed to get away with questionable behavior, feel the need to create articles like this that amount to an apologist, hey feel sorry for us public relations shot.
    I am very concerned that there are no agencies that keep oil companies honest.

    • Mark Reither says:

      When Ronald Reagan allowed the stock market to no longer use the cost of a barrel of oil and go to the ability to speculate on what the future price of oil would be he cut the throats of the drivers of the United states, just like the deregulation of the banking industry caused the almost no interest rates of savings and the banks to do as they please

      • Cris Angelini says:

        Mark, did you graduate from Media Matters University? What are you talking about? Your comment is so ridiculous, it is incomprehensible. It’s a good bet you are an Obama supporting drone, completely oblivious to free-market principles who sees no problem with the restrictions placed on domestic drilling and oil production.

  22. Richard Fennell says:

    Using ExxonMobil as an example. I’ll just call it Exxon. There is Exxon exploration and production. Exxon refining and Exxon marketing. If crude is $5/bbl., Exxon is selling it to Exxon for $5.00. Then Exxon is selling gasoline (ignoring the many other products refined from a barrel) to Exxon for, I don’t know, say, .50/gal. and Exxon is selling it to retailers for, what, .70/gal. Now someone, somewhere, on a whim, decides crude is $10/bbl. So now, Exxon (whose cost of production has not changed) sells it to Exxon for $10/bbl. Exxon (whos cost of refining has not changed) then sells gasoline to Exxon for $1.00/gal., and so on.

    While the numbers are fictional and the course of events simplified, what part of this isn’t true?

  23. Brian Jones says:

    John Thaller, For comparison, Apple Computer has a 21% profit margin, and it is now the largest company in the world based on capital value.
    If Apple produced something that is needed in order to make the journey back and forth to work each day, we would be definitely upset about the 21% profit they are turning. However, I don’t need an iPad or a iPhone to make ends meet! The next time that you want to make a comparison, make sure you are comparing apples to apples (pun intended).
    I drive a 10 year old truck that gets 15 miles per gallon, but when the price of gas rises to over 3 dollars a gallon I drive my 1993 Honda Accord because that way I can still put food on my table. It seems funny to me that people like you are oblivious to the plight of those that have to work hard to survive in this world and then try to make us feel better about getting rammed in the rear by these corporate jerks by pulling the wool over our eyes. Don’t tell me it’s raining while you’re urinating on my head; all we ask for is transparency in this matter and nobody can give us a real indication as to why gas prices have skyrocketed.

    • John Lucas says:

      WOW, I didn’t know Apple had a market cap of $9,000,000,000,000! That would make them bigger than Total Fina. Shell has a market cap of $7,000,000,000,000. I guess that makes them #3.

  24. r walsh says:

    When gas prices are high, we sometimes have to make two separate transactions just to fill up our tanks. Although I like the convenience of paying at the pump, I have suspected this is a scam. I seem to recall stores offering discounts to customers paying cash. I am not sure how much retailers/consumers pay for credit card transactions at the pump. Where is the data on these transactions and what is the difference between those fees when gas prices go from low to high?

  25. Byron Thomas says:

    Germany has very high gas prices and the strongest economy in the world.

    • Ash Chambers says:

      Yeah, but it’s whole country is also the size of Oregon. When there is no good mass transit akin to Europes, and work and family and what ever scattered hours (or days) of driving apart–it’s not a fair comparison.

  26. Erik Erdman says:

    The chart of the gas pump with the percentages of retail gas prices does not include profits. I’m pretty sure there are profits being made in the sale of gasoline. It was probably just an oversight.

  27. Steven Moshlak says:

    Please consider that sales tax was added to gasoline in the State of California, about 25 or so years ago, when it was at 5.25%. Today, the California State Sales Tax is 9.75% and I do not believe that this is reflected in your model.

    It also appears to omit budget for R&D, exploration and operations and maintenance of current systems and upgrades as required by regulation or law.

    Assuming that an oil company’s profit is about 2 cents a gallon and the company delivers a product, what about a government entity that rakes in; oil royalties, permit fees, licensing fees, excise taxes, income taxes, “severance” taxes, refining taxes and sales taxes, which amounts to as little as 25% of a product’s price, and they perform ZERO labor in the acquisition, refining or delivery of the product?

    Sounds like someone is taking advantage of and raking in big buck off the system and it’s not the consumer or the oil companies.

  28. Noah Rosenblum says:

    The (1) thing that was left out in the above article, that is the most powerful driver of the recent price increase, are the commodities traders at the mercantile exchange. the reality there is disconnected from the real world, just as at a craps table in a casino in Atlantic City, is from the street right outside the casino. Supply & demand has nothing to do with trading.
    It’s the feeding/trading frenzy, that’s driving the price of crude oil up & up.

    I say if this continues to climb with out reason, the US & the world’s economies will crash land.

    I recommend that we place oil trading moratorium for the month of June, and if things stabilize then we continue the shut down of oil trading for the rest of the year, or until further notice.

    Regulations are the end product of mismanagement and out of control greed

  29. FRANCISCO SERRANO says:

    Its funny, in all the comments here no one mention the excessive use of big cars, suv’s, single driver, etc. Nobody mention the option of using small cars or try to change the driving habits…

  30. Ken Halleck says:

    1. In the fuel making process gasoline is further up the process than
    diesel so why does diesel cost more than gas?
    2. Speculators are the ones who control fuel prices.
    3. It’s the old “we’ve got it. If you want it you’ll pay our price”.

  31. Asher de Metz says:

    yes. It’s all speculators messing with the US people.

    I manage to cut my fuel bills in half with XFT – GreenFuelPass.GoXFT.com

    It could really mess up the economic recovery. Food prices are certainly rising.

  32. Steven Smith says:

    Responding to David Powell of May 25th. Right David, we already produce a great deal of oil & you’re also correct, we’d have to start that increaded production right now to achieve doubling current production levels, however it’s currently impossible due to the industry hog tied by the “Fair Tales” of the environmental lobby & political party you obviously support. You however can’t argue, we don’t have the reseves to access! Gime us a break from the liberal “HOG WASH” and lets start getting that oil production cranked up so we may have a chance at warding off the economic disaster this administration has us pointed toward!

  33. Jerry Lavender says:

    I can see your basis for the price of gasoline… However, (and there always is a “however”) if you are making $50,000,000,000 a year, you surely could find a way to reduce the charge you make at the pump. Just as bad or worse than the way that the big banking organizations feel it is ok to LOSE MONEY and still pay their executives monumental salaries and bonuses. I would like to know how you distribute your profits to make it appear like you are giving the customer a break….

  34. john larson says:

    I find it bothersome when gas and oil price defenders call it a “supply and demand” model…it’s a false supply limit…the oil producers purposefully limit and cut back on supply in order to drive prices up…but we don’t have a real shortage of oil or gas at the pump do we? – so why should the price go up?….we had that contrived shortage with gas lines and limits and all that crap in the Carter years…haven’t seen OPEC try that tactic again have we?

  35. bill blass says:

    As the price goes up, Exxon says “cha-ching.” They are in the PROFIT business, not let’s help America business. They are oil producers not just refiners. High commodity prices means high profits.

  36. Frank Banister says:

    Seems supply and demand no longer controls price for commodities. not even OPEC can set a price for crude, you can thank speculators in the stock market for over inflated crude prices. As seen in the chart (easier to see if it was more detailed) gas prices spike at an exaggerated rate compared to oil. Also gas will spike quick on a rise in crude price, yet drops very slow on a fall in crude prices.

    • john thaller says:

      No, what you don’t realize is there is a difference between speculators and the ones that work the futures market. There are two sides to this, those that are betting that the price will go up, and therefore buy, and those that are selling. If those that have the commodity have only a tight supply, they will sit and wait for their price. When there is an oversupply, then those who are bidding the price up so to speak, are actually scrambling for selling positions they cannot hold because they cannot take delivery, actually sell their positions at lower prices and sometimes even at a loss to get rid of the commitment. You may call it speculation, and in the true definition of the word it is, but it speculation both ways, up or down and on a longer term basis, supply and demand does matter.

      • James Friedman says:

        1) the futures price helps inflate the price. Want to reduce the impact? simply increase the margin required to trade the product. Fewer players may change the price
        2) since crude is priced in dollars, a weak dollar inflates the price. prop-up the value of the dollar – reduce the cost of crude.

    • Burton Trattner says:

      There is nothing that can fix this economy better than cheap gas! That increases discretionary spending and will revive the economy. The reason it is costly in the USA is because Democrats and environmentalist base want it that way in order to preserve the green iniatives. Environmentalist political clout removed the ability and incentives to expand our domestic oil supply. We have enough oil in the US to be self sustained for another 100 yeas. We can’t get our own oil becuse of Democtrat politics.
      In 2008 Bush’s energy proposed policy called for more domestic drilling via less restrictions. but he was a Lame Duck and the Democrat controlled congress laughed him and the oil companies out of town. Now we pay!

      • David Powell says:

        I would love to see your source that says we can produce enough oil domestically to meet all of our demand for even 1 year let alone 100.

        https://www.cia.gov/library/publications/the-world-factbook/geos/us.html

        If you take a look at the CIA factbook entry on the US, which I linked to above, you can see we produced an estimated 9.056 million bbl/day of oil in 2009. Only 1 million bbl/day short of the largest producer Russia and 700K bbl/day less than Saudi Arabia. We produce quite a bit of oil already.

        Unfortunately we if you look further you’d notice we consumed an estimated 18.69 million bbl/day in 2009. Given 2009 was during the recession I think it is save to assume that number has only gone up since.

        Put that all together and to completely satisfy our demand with domestic production we’ll need to double our production of oil immediately and then continue to keep pace with any increase in future demand all while keeping gas as cheap as it is now for 100 years. Please explain to me how that isn’t the biggest fairytale I’ve ever heard.

  37. mike raarup says:

    It really peeves me that prices at the pumps go up so much. It is said that 10% goes towards distributing. Well how about the trucks that haul the fuel as well as trains and ships. The cost of fuel rising just makes the rest of the products that shipped go up too. It seems. It’s seems to be a catch 22 .

  38. Yj Draiman says:

    Oil Reserves in the USA – Abundance of Energy

    OIL Reserves in the Trillions of barrels – you better be sitting down when you read this!

    How does this grab you? And what do you make of it?

    About 6 months ago, the writer was watching a news program on oil and one of the Forbes Bros. was the guest. The host said to Forbes, “I am going to ask you a direct question and I would like a direct answer; how much oil does the U.S. have in the ground?” Forbes did not miss a beat, he said, “more than all the Middle East put together.” Please read below.

    The U. S. Geological Service issued a report in April 2008 that only scientists and oil men knew was coming, but man was it big. It was a revised report (hadn’t been updated since 1995) on how much oil was in this area of the western 2/3 of North Dakota, western South Dakota, and extreme eastern Montana ….. check THIS out:

    The Bakken is the largest domestic oil discovery since Alaska ‘s Prudhoe Bay , and has the potential to eliminate all American dependence on foreign oil. The Energy Information Administration (EIA) estimates it at 503 billion barrels. Even if just 10% of the oil is recoverable… at $107 a barrel, we’re looking at a resource base worth more than $5…3 trillion.

    “When I first briefed legislators on this, you could practically see their jaws hit the floor. They had no idea.” says Terry Johnson, the Montana Legislature’s financial analyst.

    “This sizable find is now the highest-producing onshore oil field found in the past 56 years,” reports The Pittsburgh Post Gazette. It’s a formation known as the Williston Basin , but is more commonly… read more »

    …referred to as the ‘Bakken.’ It stretches from Northern Montana, through North Dakota and into Canada . For years, U. S. oil exploration has been considered a dead end. Even the ‘Big Oil’ companies gave up searching for major oil wells decades ago. However, a recent technological breakthrough has opened up the Bakken’s massive reserves….. and we now have access of up to 500 billion barrels. And because this is light, sweet oil, those billions of barrels will cost Americans just $16 PER BARREL!

    That’s enough crude to fully fuel the American economy for 2041 years straight. And if THAT didn’t throw you on the floor, then this next one should – because it’s from 2006!

    U.S. Oil Discovery- Largest Reserve in the World

    Stansberry Report Online – 4/20/2006

    Hidden 1,000 feet beneath the surface of the Rocky Mountains lies the largest untapped oil reserve in the world. It is more than 2 TRILLION barrels. On August 8, 2005 President Bush mandated its extraction. In three and a half years of high oil prices none has been extracted. With this mother load of oil why are we still fighting over off-shore drilling?

    They reported this stunning news: We have more oil inside our borders, than all the other proven reserves on earth.. Here are the official estimates: – 8-times as much oil as Saudi Arabia

    - 18-times as much oil as Iraq – 21-times as much oil as Kuwait

    – 22-times as much oil as Iran

    - 500-times as much oil as Yemen

    - and it’s all right here in the Western United States .

    HOW can this BE? HOW can we NOT BE extracting this? Because the environmentalists and others have blocked all efforts to help America become independent of foreign oil! Again, we are letting a small group of people dictate our lives and our economy…..WHY?
    James Bartis, lead researcher with the study says we’ve got more oil in this very compact area than the entire Middle East -more than 2 TRILLION barrels untapped. That’s more than all the proven oil reserves of crude oil in the world today, reports The Denver Post.

    Don’t think ‘OPEC’ will drop its price – even with this find? Think again! It’s all about the competitive marketplace, – it has to. Think OPEC just might be funding the environmentalists?

    YJ Draiman

    • Ted Culbreath says:

      No, OPEC isn’t funding the environmentalists. But I’d bet a buck or $3.10 at the pump that big oil is. It’s in their best interests to keep prices up or pray they stay up. Instead of leading the way in environmentally safer ways to extract oil and pushing Congress to open up oil lease and drilling rights. They are racing to the bank. They love having the oil price tied to a region as unstable as the middle east. Anyway they sling it, It still smells like B.S.

      • Joel Greer says:

        Using the catch-all term Big Oil is the word-phrase substitute for wanting to blame someone for higher prices, but without a single ounce of understanding as to what all affects prices at the pump, it just shows ignorance. Like the number of times people use the amorphous term “they” in their conversation is INVERSELY proportionate to their intelligence. “They” do this, because “they” do that, and then all the “theys” conspire to hijack the fuel bills of small minded, vocabulary-lacking, persecution complex, complainers.
        The largest US oil company is only 17th on the list of the world largest oil companies.
        IF, the US did not import oil, THEN the US companies could control prices. AND, quiet likely WOULD love to control prices in the US. BUT, the US oil companies do not control prices
        Since we choose to remain an oil importing Country, our gas prices are held hostage by the oil bought and sold on the International commodities market.
        WHY doesn’t anyone complain about the % taxes of every gallon of gas which goes to the federal Gvt and State Gvts?
        The Gvts acts concerned, but the Gvt never offers to lower their tax %. When the % taxes were started, it was considered fair….as the more gas sold, the more our roads would be used….and the “taxes” were supposed to be used only for the repair of and building of more highways….EXCEPT, the higher gas gets…the LESS people drive. The gas taxes, like all taxes, create an addiction to that income and is spent on other things rather than new roads and repairs as it was initially intended.
        When America grows up and utilizes OUR reserves….we will no longer be held hostage to OPEC-set production outputs for their member Countries.
        How about we hold the State and Federal Gvt. to task to dedicate a… read more »

        …set part of the % the Gvts receive from each gallon toward alternative energy options.
        In less than a decade, if we produce ALL of our needed oil, gas would be below and stay below $2 per gallon….and would also fund our progression into non-fossil fuels.
        When oil has to travel 8000 miles to get to US refineries, it adds a huge expense. Check what the costs. including insurance, are to bring oil from the Middle East…it’s outrageous and we are stupid to continue import what we can produce ourselves. Think what that would do for American sold products when our energy costs stayed under $2. Many Countries like Japan CAN’T produce their own oil. The US can do so.

    • mike s says:

      Unfortunately this oil is not a reservoir underground like we normally think. This oil is locked in oil shale and it costs a LOT more to get it out. You must use a process called “frakking”(sp?) to get at it. Otherwise youd have to dig up half the country instead of drilling a hole like in the Gulf. And even if we did start getting it, the Chinese are the main culprits behind high prices because they’re buying up as mch as they can get; driving up the price. They USED to EXPORT oil several years ago, now theyre one of the biggest importers.

    • Kate Walters says:

      You’re recycling an email from 2008, Yj. There are several things wrong with your post. The Bakken formation is primarily shale oil, which can’t be as easily extracted as a common oil field. There are about 3.0 to 4.3 billion barrels of extractable oil in the Bakken area. The US imports approximately 3.65 bilion barrels a year, so the entire output of the Bakken shale fields would only last slightly over a year. The technology to produce one million barrels per day, which is about 10% of the oil we import daily, from shale formations is still 20 years in the future, according to James Bartis of the Rand Corporation.

      In the future, you might want to actually research the information found in emails that are being sent willy nilly to everyone.

    • mike johnson says:

      Ahhh, come on now. Who is trying to fool who here. Even if we allow every pocket in the US to be drilled and oil is found, there are only so many oil companies. The run the country (Bush/Cheney) and they set the price at the pump. The local station doesn’t set the price at all. They are told what to post. That is why they make peanuts on gas or diesel.

      Diesel is what drives our economy. Raise the price and you get record profits almost every quarter.. Raise the price and the richer get richer and the poorer poorer. Shippers all have to pass on the cost of prices to the consumer. They are barely affected as commerce HAS to flow. Airlines simply pass on the cost of fuel to the passenger, one way or another. So, Joe Citizens gets to pay more and have less to spend on household goods, made out of petroleum I might add.

      So, until our government takes control of their own oil resources, from drilling, to processing, to their own gas station, we will be at the beck and call of Big Oil.

    • Stan Nedorlander says:

      Yes they didn’t know of this because this is a BOGUS Internet report…

      http://www.snopes.com/politics/gasoline/bakken.asp

    • Andrew Larson says:

      Your math is WAY off. The US consumes ~19M barrels per day. So 500B barrels produced / 19M consumed / 365 days = 72 yrs. So We would only have 72 years of oil from that reserve if we were able to collect it all and if we only used it here in the US, which we would almost certainly sell to other countries because we would make a crap ton of money that way.

      Do you math right before jumping the gun on all of your info.

    • Jack Heath says:

      YJ Draiman – You share a very limited perspective like most Americans shouting “Drill baby Drill!!” because you think the only use of oil is burning it off in your car tank. Cars can run on something else if they had to, if gas got too expensive you could still run cars on electric (coal), cooking oil (animal fat), vegetable oil (corn), etc. However, crude oil can not be replaced in terms of producing plastics, cosmetics, electronics, silicone chips. Our military superiority comes from our technological superiority. If oil is a limited resource, shouldn’t we consume the oil of other countries first? …and if it is something that is truly indispensable; does it matter how much we have? If it’s gone, it’s gone.

      Forget environmental concerns. The day WILL come when you won’t be able to get any more oil from the middle east, Africa, or the Virgin Islands…then your children will be glad some environmentalist left massive domestic reserves.